9 Barriers in Customer Retention and How to Break Them

To grow your business, you need to do more than focus on getting new customers. You need to invest time and money into retaining your existing customers as well. Repeat business costs much less than attracting new customers.  

The conversion rate also, for obvious reasons, is higher for existing customers. And when you’re able to retain your existing customers, it gives you more opportunities to get to know them better. Strong customer retention also helps build your brand’s reputation.

Still, many companies often fail to retain their existing customers. Let’s take a look at nine of the most common barriers in customer retention and how you can overcome them.

1. You Focus More on Getting New Customers

44% of companies focus on customer acquisition, and only 18% focus on retention. Many companies believe that getting new customers is the key to increasing market share.

Their sales and marketing teams, therefore, get busy working towards covering new ground and forget to implement any retention strategy. They remember existing customers only when they need to upsell in order to increase the total revenue. By then, it’s too late.

Staying in touch with your customer while implementing a year-long retention strategy is the first step towards retaining customers.

2. Lack of Limited Time Discounts and Offers

Your retention strategy should include limited time discounts and offers. They help generate a sense of urgency. And the added advantage of special discounts and offers is that they help clear up your inventory on a regular basis. Which makes room for new things.

RIPT has daily deals on their website that expire in 24 hours. Their daily deals create a sense of urgency and increase sales. No wonder, customers keep coming back.

3. Lack of Segmentation

Many companies don’t bother to properly segment their customer base. Without proper segmentation, they fail to understand their customers’ individual needs, wants, and desires.

The discounts and product recommendations you send to a 40-something housewife and mother of three may not be appropriate for an 18-year-old male fitness fanatic.

You may send your regular customers a buy-one-get-one offer. But the same may not appropriate for your premium customers.

Obviously, you need to segment your customers effectively so you can give them more personalized customer service and offers.

Check out this amazing example of a super customized email from the British jewelry brand, Monica Vinader.

This email is based on the basic segmentation of gender and knowing their customer’s name. They use the recipient’s name, Kim, in the body of the email, and they also use her first initial, K, in the image as part of the jewelry.

This gives customers an unforgettable experience and helps retain them for a longer period of time.

4. Neglecting Customer Service

Many companies think having a customer service team is a burden and is an unnecessary expense. So they hire representatives with little or no experience to cut costs. They fail to understand the long-term benefit of quality customer service and therefore, lose customers.

Sverre Hjelm shared his experience of visiting a “Best Customer Service” award show in his blog post, “Good Customer Service Yields Customer Loyalty.” He said that the winning company was an airline that ran a survey to understand their customer satisfaction level.

Amongst the flyers who had not experienced any problems like flight cancellation or lost luggage, their Customer Satisfaction Index (CSI) was around 70. The flyers who faced a problem, but who were then treated well, had a CSI of around 77.

In short, the flyers who had experienced problems were actually happier than those who hadn’t because they thought they were taken care of well.

Recommended: Surefire Ways To Provide A Pleasant Customer Experience

5. Lack of Customer Appreciation

Once on board, companies often make the mistake of taking customers for granted. They forget to appreciate them, and the customers feel neglected. In order to retain your customers, you need to appreciate them more often and be thankful for their business.

This shows that you care for them and that you think they are special. Trust me, your customers will remember that for a long time.

Maker’s Mark, the bourbon company, runs an ambassador program to demonstrate their appreciation of their loyal customers. They put a customer’s name on a barrel and the customer can then buy from that batch. Those special customers also have access to Ambassador-only merchandise.

6. Your Product is Not What They Wanted

Sometimes, a customer buys a product later to realize it’s not what they expected or what they really wanted.

You have to be very careful to prevent this from happening. In order to do so, you have to make sure you promote the right products to the right consumers. You also need to make sure you have a realistic and relevant value proposition so you don’t build up false hopes.

7. Ignoring Customer Feedback

A feedback is a gift. Remember, most dissatisfied customers won’t bother to complain or give feedback. They simply walk away, and you never find out why.

If a customer takes the time to give you feedback, it’s a good sign. Even if the feedback is negative. It means that they have found something of value too. Appreciate all feedback, and implement changes accordingly.

Many companies don’t even bother to keep track of feedback. They fail to understand the customer’s changing needs and therefore fail to retain them.

You need to pay attention to feedback, as Matt Duczeminski explains in his article on PostFunnel, as well any user-generated content on social media. This includes photos and check-ins associated with your brand as well.

Paying attention and responding to feedback and user-generated content can help you build trust with your customers.

8. Increasing Competition

Competition is always increasing. If you don’t do something to set your business apart from the crowd, your customers may leave. And unfortunately, they may take their business to your competitor who is doing something different.

In order to thrive, you need to understand the market needs and introduce new, innovative products. This will help you not only retain your current customers but also attract new ones.

9. Lack of a Personal Touch

Customers are overwhelmed by too many choices. You cannot retain a customer if you don’t make a special connection with them. And this special connection comes from one-on-one relationships with your customers.

It might seem like a lot of work to make a connection with each of your customers. But the effort is worth it. And in this era of advanced technology, it's not as difficult as you may think.

Starbucks baristas write their customers’ names on their cup to make their interactions more personal. One Starbucks employee even learned sign language to serve one of her deaf customers. This created a great impact and goodwill for their brand.

Bottom Line and Going Forward:

To retain your customers, it takes quality products, great customer service, attractive offers and discounts, and understanding your customers better.

These are the best ways to retain your current customers and foster long-term relationships with them. Make your company a customer-centric one. After all, your business exists because they do.

Have any tips to add in improving customer retention ? Please share them in the comment section below.

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